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Will Obamacare Prove to Be a Disappointment for Those Who Need It Most?

It's been a long road coming, including two full months rife with technical glitches on the state and federal side of Obamacare's health exchanges, but the new health-care reform law is now firmly in place, and through the first week of its implementation, everything appears to be running smoothly.

Although we likely won't have firm state-by-state data until next week from the Department of Health and Human Services, I'd call it a pretty conservative estimate that more than 2 million people signed up for health insurance over the past three months, right in time for the insurance coverage cutoff date of Dec. 24, in order to be covered by Jan. 1, 2014.

Still, this figure is pacing well below projections from the HHS, which had forecast 7 million paying enrollees by March 31, the final day to enroll for health insurance coverage without violating the individual mandate in 2014.

When speculation gives way to implementation, perceptions changeMuch debate over the past couple of years has been given to who Obamacare would benefit the most, and who would suffer the greatest. Let's face it, no law benefits everyone, and there's bound to be higher costs involved for some groups along the way in order to pay for the complete overhaul of our health-care system. What's interesting, though, is that speculation versus implementation can completely change your perception of who benefits and who doesn't from this controversial law.

For the past couple of years, much emphasis has been placed on the undue burden that middle-class, young adults, and upper-income earners would come to bear from Obamacare. To some extent, this has remained the case, as with young adults who are being counted on by insurers to enroll and balance out the higher medical costs associated with elderly and terminally ill patients.

However, upper-income and middle-class consumers haven't been suffering to the degree that opponents of the law would have projected. Some of that could be pinned on a recovering U.S. economy, which has left consumers with more disposable cash in their pockets. The other often overlooked factor is that while Obamacare itself may be overwhelmingly disliked -- just a 35% favorability rating compared to a 62% disapproval rating according to the latest CNN/ORC International poll -- the desire to have health insurance is overwhelming among upper-income and middle-class citizens. In other words, the ideal for reform is alive and well, and it wouldn't surprise me one bit if many of the new enrollees are middle-class Americans.

Low-income individuals and families draw the short straw Ironically, the subgroup that I feel could be left out in the cold by Obamacare is lower-income individuals and families -- the subset I originally expected to benefit the most.

Don't get me wrong, some locales are going to work out perfectly for low-income individuals and families. Traditionally Democratic states such as California, New York, and Washington, which have welcomed the expansion of their Medicaid programs with open arms, are going to be able to use federal assistance generated through taxation (think the medical device excise tax and surtaxes on investment income for upper-income earners) to help lower-income individuals who can't afford health care on their own.

Unfortunately, around half of the nation's states didn't agree to expand their Medicaid programs, and as a result, millions of low-income citizens are left in health insurance limbo. Before you go berating the states that chose not to expand their Medicaid programs with what was essentially free federal assistance on the table, keep in mind that starting in 2016 and running through 2022, the federal government will scale back its portion of Medicaid cost-covering in participating states from 100% to 90%. In other words, nine years from now, these states contended that they would be paying a considerably higher and potentially unsustainable cost to cover lower Medicaid-eligible people and families.

Although these lower-income individuals are exempt from the individual mandate penalties, Obamacare's beefed-up benefits requirements have dramatically boosted premiums for lower-tier insurance packages, all but ensuring lower-income citizens are priced out of the market. Coupled with half the nation refusing to expand their Medicaid program, including Texas, which is home to the largest number of Medicaid-eligible citizens, lower-income individuals may have drawn the short straw once again.

How this could be bad news for your portfolioIf Obamacare proves of little help to a majority of lower-income individuals in this country, it could portend bad news for select insurers and hospital providers who had been counting on strong enrollment figures.

Aetna (NYSE: AET) and CIGNA (NYSE: CI) , which spent $5.7 billion and $3.8 billion on the acquisitions of Coventry Health Care and HealthSpring, for example, could find that those purchase premiums were far too high in order to move into the government-sponsored health insurance market. WellPoint (NYSE: ANTM) , even though it ponied up $4.5 billion for Amerigroup, enjoys the privilege of operating in some of the top-performing state exchanges, such as California's. That alone should save it from poor results while Aetna and CIGNA may struggle to meet Wall Street's expectations.

Other insurers, which focused on lower-income households long before these three national insurers entered the fray, may struggle. In particular, Centene (NYSE: CNC) , which operates in a number of states that chose not to expand their Medicaid program, could be leaving a lot of potential members on the table because of Obamacare's broadened minimum benefits provisions.

Finally, hospital operator Tenet Healthcare (NYSE: THC) may see minimal positive impact from Obamacare relative to its peers since many of its hospitals are operated in states that aren't expanding Medicaid. In other words, patients that didn't have health insurance because of their income previously still probably won't, and those who did have health insurance still likely do. This means the percentage of revenue that Tenet writes-off as uncollectable each year because of uninsured and underinsured people is unlikely to budge much.

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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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I am just taking a guess, pure speculation - the writer of this article has way too much kool-aid.

The poor lose out but the he wouldn't be surprised if many of the new enrollees are middle class.....wow has he been paying attention at all to the number of Medicaid sign-ups? The number of people signing up for plans that are subsidized? Is anyone in that exchange actually paying the full amount on their own? I do enjoy the delusional visions, they are funny, unrealistic, but funny.

I quote "upper-income and middle-class consumers haven't been suffering to the degree that opponents of the law would have projected". That's because these people have jobs and their employer coverage has not been affected yet by Obamacare. Wait a year for the full mandate on employers' plans and check again.

The number of people signing up is AHEAD of the numbers expected .. yes AHEAD ...

Mass. - RomneyCare serves as the best example .. the number of signups goes up EXPONENTIALLY

and HealthCare.gov signups rose at a faster rate than the RomneyCare plan in Mass.

Your point about ObamaCare not helping low income people because Republican governors decided to screw their constituents because their miffed at democrats for taking their plan would make it republican governors who hurt low income families in their state ... Right? that is what you said in the article

I have a childhood friend who had a massive heart attack on Oct 11th 2013. He is a tow driver, $250 taking home per week, No insurance. I looked in many directions and they all pointed to coveredca.gov. I applied in late October! I have never been able to complete the online app. So I have called. Maybe I have spoke with 8 agents and not one could get me further into the app but said they would call me back on agreed upon dates and times. "Not one called me back". He has been in the hospital 2 times for a total of 5 weeks, since October 11th. This was an on the job heart attack. I filled forms out for Workers Comp, State Disability. Coveredca.gov says he qualifies for medi-cal. Medi-cal says it takes 30 days for an evaluation... "REALLY" Today I sent a letter to Boxer, and channel 7 News! Everything he has lived on since he's been home has been donated. OBAMA has really pushed us into a very uncomfortable position and that UNDERSTATED!!

Yes, Republican states e.g. Texas on purpose declined the expansion of Medicare, to prevent people from benefiting from Obamacare. GOP would do anything to put Obama down, even on the expense of the health and well being of the most vulnerable. GOP hate the thought that someone could be happy with Obamacare. They put millions of $$$ to prevent people from being covered by a health insurance, the insurance that ALL civilized world provides to every citizen, but US.

Compared to the way our health system ran before Obamacare the answer to this obviously heath insurance corporation sponsored article is 99% of ordinary citizens benefit with a health care program that has not even been fully implemented and already has dramatically reigned in health care costs. Health insurance corporations enjoyed literally risk free and highly profitable business model that shifted most of the risk to individuals and gave the big corporations a "Get out of jail" card because they could cancel coverage and limit their payout if you get sick. Health insurance hate having to offer substantial coverage and actually bear the risk. They also hate that they have more competition in the market place and they have to submit to increased government scrutiny. Health insurance corporations are not in love with the government telling them how much of consumer dollars they get to keep to cover their costs and profitability. The program is not fully implemented and it has already reduced health care costs. With the additional competition I predict health care cost will contine to fall to levels we have never seen in the US. In Canada a family of four or more pays only $49/month and they throw in longterm care for seniors for nothing.

obama is a disappointment obamacare is a scam yo make billions offf of hard workung American people. He should be Impeached and put in prison along with everyone involved. Alot of our gov is behind him and his communist ways! they want to control us just like hitler ! Hitler done the same thing obama is doing using kids to disarm us telling people he will take care of their healthcare and he did alright he put them in pens and then in gas chambers.

StockBeast: You are watching too much MSNBC and listening to too much NPR. As Steve Jobs said you are under a "reality distortion field". The ACA was NOT a GOP plan at all. ZERO voted for it. The ACA was hatched by socialists like Nancy Pelosi and company. Any single-payer plan would never have passed (and never should). The GOP wanted tort reform for one thing as a way to combat "high" healthcare costs. Of course the trial lawyers associations lobbied Congress to keep that away. And it is not up the GOP to fix the ACA problems.

The only 7 million goal made by Obamacare are the number of health care policies have been canceled in 2013. Obama has claimed 2.1 million have signed up in by Jan 1st. They have inflated their numbers by including the individuals that are getting Medicaid, running 80% to 90% since October 1st. Of the people that are getting Obamacare only half have paid anything to get their policy. Many of them that have gone to their doctor or hospital they have been turned away because there is no card or proof that they have ANY POLICY AT ALL.

stockbeast, republicans unanimously rejected obamacare. It doesn't matter whether it was a republican idea or not (an idea they've rejected now, with romneycare being a different beast and the one exception), the democrats built it, ignored republicans save for a few cosmetic changes they requested and then pushed it through against majority sentiment and despite unanimous - let me repeat that word, unanimous - republican rejection.

succeed or fail, the dems own it. but it's funny how you try to lay the democrats actions on the republicans.

In other words, the ideal for reform is alive and well, and it wouldn't surprise me one bit if many of the new enrollees are middle-class Americans.

The middle class will only enroll because they are afraid of government reprisal. I predict that within 3 payments, most will stop paying due to lack of, and I quote....(look in the quote marks)

However, upper-income and middle-class consumers haven't been suffering to the degree that opponents of the law would have projected. Some of that could be pinned on a recovering U.S. economy, which has left consumers with more "disposable cash in their pockets".

Lastly, the economy is not getting better for the middle class, They do not have disposable cash!!!

Sending report...

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the health care sector, but also has a penchant for mining, retail, and automotive stocks, as well as personal finance and macroeconomic topics of interest. Follow @TMFUltraLong